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Learning From Honda's Mistakes

Auto Companies Need to Communicate With Workers, Says Yang Jian

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SHANGHAI (AdAgeChina.com) -- Why do workers strike? Well, most of the time they do it for better pay. But when workers at the Honda transmission plant in Guangdong province staged a walkout three weeks ago, they made one extra request.

In their negotiations with management, the workers demanded an opportunity to learn Japanese so they could talk directly with the Japanese nationals who run the plant.

Yang Jian
Here is a lesson for Honda as well as other foreign auto companies operating in China: Establish an effective communication channel with your workers to reduce the chance of being caught up in wildcat strikes sweeping across the country.

After opening itself to the outside world in the late 1970s, China has done a fabulous job in attracting foreign investment. In addition to inexpensive land and low taxes, foreign companies have been attracted by China's cheap and non-unionized workforce.

Beijing's ban on independent labor unions has made it easy for the management to reject individual worker's requests for pay raises. But it also deprived management of an effective communications channel with workers.

Why were the three Honda factories the first Chinese auto plants to experience work stoppages?

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The main reason comes down to wages. Prior to strikes, they only paid their workers RMB 1,000 to 1,500 ($146 to $220) per month. By contrast, American and European suppliers in coastal China pay nearly twice as much.

But a lack of communication between the management and the workers also helped trigger the walkouts. Before the strikes, there was virtually no communication between workers and their employers. That resulted in a high turnover rate, and the workers who stayed behind often felt mistreated.

Once the strikes began, the official union was unable to negotiate on the workers' behalf because it had no credibility.

During the walkout, the local branch of the All-China Federation of Trade Unions sent 40 members who were supposed to act as mediators. Instead they clashed with the strikers, who believed they were trying to force them back to work.

Honda didn't make much progress until Zeng Qinghong, president of Honda's joint-venture partner Guangzhou Automobile Industry Corp., offered to mediate. Mr. Zeng, a straight-talking executive, prodded workers and management to reach a compromise.

After suffering three wildcat strikes, Honda finally has recognized the need to improve employee communications.

"We need to have more opportunities for managers to listen to employees regularly," Honda company spokesman Yoshiyuki Kuroda told Bloomberg News. "Without a system in place to communicate with individual workers, the company was unable to predict that strikes were coming."

It is time for other companies to heed this message and reach out to their workers for communication.